Mergers and Acquisitions

Levine: Trends in M&A Deal Terms

Today’s post of the day is from my partner Seth Levine (Foundry Group) and is titled Trends in M&A Deal Terms. Seth has been involved in several significant acquisitions recently, including Google’s acquisition of AdMeld and Federated Media’s acquisition of Lijit, so he’s been deep in the contemporary negotiating dynamics. He also includes a great…

Should I Be A Shareholder Representative?

Note:  This was actually a question that I received from a colleague via email, but thought I’d post it here given the content.  Q:  My company is close to signing a contract to sell the business.  Although I’m prepared to do the role, one of the board members has suggested that we consider using a…

Do Venture Capitalists Demand Audited Financials?

Q:  Do venture capitalists require audited financials from the companies they’re considering for an investment?  Will “reviewed” financials suffice?  For that matter, how do acquirers think about audited financials?  Will they help speed an acquisition or is it overkill? A: (From guest writer, our partner, Chris Wand).  We have a requirement that all of the…

What Happens to Unvested Options in a Merger?

Q: I work at a startup in the valley, and I’m wondering what happens to unvested shares in the event of acquisition? I.e., should I expect that they are canceled, accelerated, or stay on the same vesting timeline? A:  (Jason)  The answer is “all of the above.”  Any of these are potential outcomes in an…

Selling a Company: To Auction or Not Auction

Question: I’m part of a small company that has been bootstrapped and grown organically over the last 4 years. We are at the point now where large competitors are very interested in us. We are seriously considering an exit. I have two questions: 1. What do you feel about auctions versus dealing with one party?…

Merger and Acquisition Due Diligence – The Seriousness of the Acquirer

Part 2 of David Shanberg’s article on M&A Due Diligence.  Part 1 addressed what to expect from the due diligence process. This time David addresses “How To Be Protect Your Confidential Information While Still Moving the Process Forward.” Potential acquirers are typically trustworthy and sincere in their intent when conducting due diligence, with making an acquisition the…

How Do You Negotiate a Carve Out With Investors?

Q:   We are in the midst of negotiating a carve out with an investor on the East Coast.  Two stumbling blocks have occurred.  The first issue is what is an appropriate option pool size and does it vary from East to West coasts?  The investor tends to believe that there are a significant differences in…

Common Stock Carveouts In Acquisitions

If you read our term sheet series, you know that we spent a fair amount of time discussing liquidation preferrences.  Jesse Fried and Brian Broughman, a professor and graduate student at Berkeley, respectively, recently published a paper about the emergence of common stock carveouts and some of the reasons why they belive venture capitals are…